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Urbanika / DeFi-Adoption-IRL

web3 credits for traditional micro businesses to drop their interest rates from 50% to 90%
https://www.decreditscore.xyz
MIT License
2 stars 1 forks source link
decentralized-finance real-world-assets regenerative-finance

readme

deCredit Score

A study regarding how to unlock IRL reputation in web3 was carried out through the CoLab Fellowship (a RnDAO's and Arbitrum DAO's research program). The study is available here, and it was developed by one of the team members of this grant.

The study found out that the data coming from web apps (such as Google Maps) and from RWA assets (such as title deeds, municipal license, bills, etc) provide an enough initial trust level for web3 lenders to offer a micro credit of $100 (and upto $500) to local businesses.

The study delivers a graph made from the insights of interviews, onfield observation, and document analysis carried out by the research. The graph is found below in Figure 1.

Figure 1 shows that if data is tokenized through attestations that can be validated and stored within a smart wallet -that serves as a decentralized identity (DID), then IRL businesses can tap into DeFi.

Figure 1 Figure 1

This grant aims to build a dApp that local business can use to borrow in DeFi and build a sovereign credit score, which allows them to progressively access cheaper and larger credits.

We know we might not get the enough funds to make the whole dApp, so that's why we've planned a milestone-based progress which has budget constraints:

🎯 Milestone 1 -> already working on it thanks to the donations from "Community Alliance, Beyond Coordination" Gitcoin Round.

  1. Smart wallet creation using Candide's SDK.

  2. Gamified Trust Score onboarding. Here is where the person looking for a credit will fill out verifiable credentials (following the Gitcoin Passport scheme). Each credential is verified by Ai and algorithms such as with Reclaim Protocol, and Holonym, and in some cases they can be verified too by a trusted agent on the ground (such as to verify home and business addresses).

🎯 Milestone 2 -> unlocked if we get $5K to $15K

  1. Trust weight of each stamp (verifiable credential). The weight will defined collectively by a focus group of financial workers, lenders, and borrowers, and peer reviewed by web3 and reputation practitioners, such as those within The Trusted Seed.

  2. deCredit Score as a smart escrow. The smart wallet will hold four main functions enabled by smart contracts:

i. Collateral delegation. Allow the borrower or a third party to lend collateral (fork of Aave's credit delegation) and earn from backing up the credit line, or if the borrower is the one providing collateral then decrease the interest rate.

ii. Collateral vault. ReStake the collateral in proven low risk DeFi strategies so that the collateral makes money while being passively protecting the loan.

iii. Automate conditions. Trustlessly automate penalizations, rewards, and profit distribution.

iv. Credit score update. Attestations will be automatically issued from payment behavior, and these will trigger an increase or decrease to the person's trust levels, and therefore to their interest rate within its Decentralized Credit Score.

  1. Gamified interest rate. Based on the trust score and the collateral in place, a smart contract will update the interest rate and offer tips, opportunities, and benefits.

🎯 Milestone 3 -> unlocked if we get over $20K

  1. Pilot test!. We have agreed with a financial institution in México to test this solution with 100 clients.

  2. Documented insights. Open knowledge is key to enable others to audit, replicate, and improve what we are doing, while also support us to keep a constant improvement mindset.

🏆 Team

Humberto Besso Oberto H. Researcher and Business Dev.

Sofía Villareal. Designer.

Irwing Durán. Front-end dev.

Johan De Jesús. Front-end dev.

License

MIT and Creative Commons. All that we build is Open Source.

📱 The proposed UI

Onboarding UI

Onboarding UI

Borrower's profile

Borrower's profile

Borrower's personal interface

Borrower's personal interface

💝🌎🌍🌏💕Why funding this matters?

Verifiable off-chain data will ease the path for more people to benefit from the potential that decentralized and regenerative finance can bring to local economies, and as an open source development it can be forked and modified to cover plenty of other use cases.

Donating to this project means supporting the development of scientific research for public good. Please do consider supporting us!

Do you want more info?

We encourage you to: Read the paper. DM us or invite us to hold a conversation on how to improve the approach.